Legimate Streaming Services Cut Down on Piracy, Report Suggests

Does the presence of legitimate music streaming services cut down on piracy?

The folks at Musicmetric, a London company that tracks online activity, think so.

In a Digital Music Index report set to be released on Wednesday (Oct. 3), Musicmetric found that music file downloads using BitTorrent tend to increase in countries that don't have legal music streaming services such as Spotify. Among the top 10 countries with the fastest growing BitTorrent market share in the first half of 2012, only one, France, had Spotify.

Conversely, in the top 10 countries where BitTorrent activity has decreased fastest, five have access to Spotify.

"This implies (although does not prove causation) that the proliferation of free access or low-cost streaming services is making a dent in piracy rates in those countries where those services are available," according to the DMI report, which tracked downloads of actual music files, rather than just the torrent file.

This is part of the argument that Spotify executives have been making for years to allay concerns from music executives and artists who fear that free, on-demand streaming from Spotify would cannibalize sales. Instead, Spotify has argued that its service cannibalized piracy, giving artists and labels a revenue stream from where there was none. The DMI report appears to support this claim.

But it's not a slam-dunk, said Billy Pidgeon, a digital media analyst with M2Research in New York.

"There's been an overall decline in Torrent activity in recent months," Pidgeon said. "When you look more closely at the reasons, there are usually more than one factor involved. Some of it has to do with the availability of legitimate streaming options. But there are many other factors in play."

For example, Demonoid, a popular BitTorrent tracker, shut down this summer after reportedly being crippled by denial of service attacks. The disappearance of Demonoid could account for some of the decline in some countries where the service was popular, Pidgeon said.

Other countries could be experiencing declines because of stepped up enforcement. The U.S., for instance, which showed the second-biggest shrinkage of BitTorrent market share, shut down Megaupload in January.

Here are Musicmetric's lists of countries with the fastest growing, and fastest shrinking, BitTorrent shares.